You are on page 1of 12

Hospitality Industry Chart of Accounts

Generally accepted practices for the Hospitality industry involves the use of a Chart of Accounts that
is organized to provide both good departmental profit and rich statistical analysis. Departmental
profitability is widely used to manage hotels as it provides the information needed to make decisions
in an environment that is often subject to both seasonal and general economic fluctuations.
Seasonal fluctuations affect some locations and types of operations more than others, but virtually
every property experiences some amount of revenue variation that requires management to make
decisions regarding expense management, especially staffing, the biggest single expense variable that
management has the ability to control in the short term. It is also an industry that tends to be first
impacted by general economic downturns and the last to recover when the economic growth turns
Therefore, analyzing performance by department is widely accepted as a way to provide management
with the information needed to make decisions such as when to close or reposition restaurants, or to
use slow periods as opportune times to renovate rooms.
By organizing the Chart of Accounts to accurately allocate revenue and expense by department,
management is able to focus on decision making in the areas over which it has control; fixed costs
such as taxes and mortgages being unchangeable in the short-term. Standard industry metrics such as
Occupancy Percentage, Revenue per Available Room (RevPAR), Revenue per Cover, allow
management to compare performance historically as well as to readily available national and local
The Uniform System of Accounts for the Lodging Industry (USALI) originated in 1926 in New York
City, when the New York Hotel Association published the first edition as a response to a generally
held belief that hotels needed to use a common set of standards for reporting revenue and expenses in
order to provide credible data to bankers and investors. The current version, the Tenth Edition, was
published in 2006. Versions of this standard have evolved for Club, Casino, and Spa operators.

There are two considerations that are significant in any Chart of Accounts. The first of these is the
level of detail required. It should be appropriate for the size and complexity of the operation. A small
limited service hotel with no food and beverage operation does not require the number of accounts a
large resort with rooms, restaurants, golf, marina, etc. requires to track all revenues and expenses. The
general guideline is care should be taken to anticipate the level of analysis that will be done, and if in
doubt, err on the side of adding accounts to track a specific balance. While adding accounts later is
generally easy, maintaining a good, structured chart is more easily done if some thought is put into its
initial design.
This influences the number of characters used for each portion of the account. In its simplest form, for
example, the main account code does not need to be 6 characters if the total chart is only 500

Page 1 of 12

The second consideration is the actual account structure to be used. This is important both in terms of
providing the foundation for the type of departmental profitability discussed above and to allow easy
management of the data using modern data management and reporting tools.
Typically, most operators utilize software that stores the data in a relational database and use either
the tools of that product, a generic product such as Crystal Reports, or spreadsheets such as Excel to
provide the final reporting. Todays Excel product has evolved to allow much more sophisticated
analysis though the use of Pivot tables which rely heavily on a well-structured database.
Data Plus strongly supports the recommendations detailed in the Ninth Edition of the USALI
describing an account structure that involves a Main Account Department Account structure.
Following is the excerpted chapter that describes this organization.
The use of a Main Account Department structure allows for the consistent use of a single account
for a type of revenue or expense. This makes it easy to both construct departmental profit and loss
statements as well as to analyze expenses across departments. For example by having a single main
account for Uniforms or Employee Benefits, it becomes much easier to determine department
profitability while aggregating these expenses for the entire operation.
Further, this type of structure allows the software the ability to provide more sophisticated
functionality such as automatic substitution of Department code in order to correctly associate the
Employers portion of the Social Security tax based on the employees department an important
consideration when evaluating the true employment costs for a department.
Data Plus offers a suggested standard Chart of Accounts that is based on this concept, but from
experience with hundreds of properties of varying complexity, it is realized that the actual numbers
(or letters) used, the size of each part, or even the need for a Sub-Account is best determined by the
Data Plus also offers a ready-made set of financial reports based on the Tenth Edition of the USALI
for the convenience of users. While these are widely accepted by lending institutions that have
become knowledgeable in their reliability in providing quick and accurate analysis of an operations
profitability, they are often considered to be insufficient in the detail needed for operational
In summary, the position of Data Plus is that a well-structured Chart of Accounts is important to
support the long-term reporting needs of the organization and to allow the software to provide the
highest level of efficiency in transaction processing.

Page 2 of 12

Page 3 of 12

Page 4 of 12

Page 5 of 12

Page 6 of 12

Page 7 of 12

Page 8 of 12

Page 9 of 12

Page 10 of 12

Page 11 of 12

Page 12 of 12